Home / Business and Economy / Paramount Merger Faces $111B Price Tag & Debt Concerns
Paramount Merger Faces $111B Price Tag & Debt Concerns
3 Mar
Summary
- Merger cost estimated at $111 billion including debt assumption.
- S&P Global Ratings placed Paramount's ratings on CreditWatch negative.
- Deal completion is expected in the third quarter of 2026.
S&P Global Ratings has placed all ratings for Paramount Skydance on CreditWatch with negative implications. This action stems from concerns over increased leverage well above the agency's threshold should the merger with Warner Bros. Discovery proceed. The agency acknowledges the deal could significantly improve Paramount's business profile by expanding its content library and enabling competition in the global streaming space.
The companies announced the merger on Friday, with an expected closing in the third quarter of 2026. S&P estimates the total cost to Paramount Skydance at $111 billion, including the assumption of Warner Bros. Discovery's debt and a $2.8 billion termination payout to Netflix. Additional costs could arise from a daily ticking fee if the transaction extends beyond September 30, 2026.
Paramount's current 'BB+' rating is considered junk status, with leverage already at 4.8x at year-end 2025, far exceeding the agency's downgrade threshold of 4.25x. The merger, combining three companies with Skydance as the controlling entity, presents unique challenges. S&P seeks evidence of realized cost synergies, with Paramount anticipating at least $6 billion in savings.
The proposed merger requires approval from Warner Bros. Discovery shareholders and various regulators. Despite board approvals, the combination of two major film studios faces widespread unpopularity in Hollywood and scrutiny from lawmakers and state attorneys general.
